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Dow Jones Industrial Average (Historical)
Dow Jones Industrial Average Return Rate / Housing Starts Growth Rate
1/50          1/1960            1/1970            1/1980           1/1990             1/2000            1/2010            1/20
The 12 month Historical Dow Jones Industrial Average Return Rate, is shown in gray. The rate is
based on the DJIA monthly close, excluding dividends. DJIA refers to the Dow Jones Industrial Average.
The annual New US Privately Owned Housing Starts Growth Rate is plotted monthly in green. Other
two-data-series graphs are available. See links at the bottom of each page.
Dow Jones Industrial Average Return Rate vs. Housing Starts Growth Rate
 
DJIA Return Rate
Simultaneous Change
DJIA Return Rate
Subsequent Change
1% Rise in Housing Starts Growth Rate in 1 Yr
+0.32%
-0.14%
1% Fall in Housing Starts Growth Rate in 1 Yr
-0.30%
+0.14%
What does the table mean?
It indicates that a 1% Housing Starts Growth Rate increase over a 12 month period,
(from 5% to 6% for example) has typically been accompanied by a 0.32% Dow Jones
Industrial Average Return Rate increase during that year and a 0.14% Dow Jones
Industrial Average Return Rate decline the following year.

It also indicates that a 1% Housing Starts Growth Rate decline over a 12 month
period, (from 5% to 4% for example) has typically been accompanied by a 0.30% Dow
Jones Industrial Average Return Rate decline during that year and a 0.14% Dow
Jones Industrial Average Return Rate increase the following year.

The center column shows the change in the Dow Jones Industrial Average Return
Rate over 12 months, depending on whether the period experienced a rising or falling
Housing Starts Growth Rate. The right column shows the change in the Dow Jones
Industrial Average Return Rate during the year following an increase or decrease in
the Housing Starts Growth Rate.

The data history in the middle column shows a significant tendency for the
two rates to move in the same direction during the same time period.

The evidence for using the previous 12 month change in the Housing Starts
Growth Rate to predict the future direction of the Dow Jones Industrial
Average Return Rate is weak (right column). That evidence indicates that the
direction of the rates are inversely related to each other. Therefore, a
change in the Housing Starts Growth Rate suggests that the Dow Jones
Industrial Average Return Rate will move in the opposite direction of the
Housing Starts Growth Rate, but only to a limited extent.

Annual rates are shown in the graph and calculations.



How Do I Use This Information?
There are many investment theories that are well publicized in the financial press.
Even though little or no historical data may be offered as evidence for such theories,
many investors use them subconsciously, if not intentionally.

Example Theories: Rising Inflation is bad for the stock market. A booming housing
market is good for the S&P 500 stock index. A falling fed funds rate means that long
term interest rates will fall.

There are many such theories. In this site,  long term investment and economic data
is tested against decades to determine whether a relationship actually exists or not.
This historical correlation provides a vital aid in interpreting the often confusing
behavior of the financial markets. The perspective gained may be the difference
between staying the course or being blown and tossed by every investment theory
that is popular at the moment. What the majority assumes to be true, often is not. In
the final analysis, readers are admonished to follow the evidence, wherever it leads.

This page tests the relationship between the Housing Starts Growth Rate and the
Dow Jones Industrial Average Historical Return Rate. Suppose you are making a
business or investment decision. Suppose again that the decision hinges on whether
the Housing Starts Growth Rate and the Dow Jones Industrial Average Return Rate
tend to move in the same or opposite directions. The data, graphs, and analysis
above will enlighten you. You'll discover whether they move with, inversely to, or
independently of each other.

Suppose that the Housing Starts Growth Rate has risen sharply and that you need to
know what direction the Dow Jones Industrial Average Return Rate is headed in the
near future. Does the recent increase in the Housing Starts Growth Rate provide a
clue about the future direction of the Dow Jones Industrial Average Return Rate? The
data history, graph, and analysis above will show you how the Dow Jones Industrial
Average Return Rate has performed after increases in the Housing Starts Growth
Rate. You'll see if one indicator has been likely to signal a change in another. This is
not intended as a prediction, but merely as a clue to the future from the annals of
history. No man knows the future, unless he has the ability to control the future.

This site compares data series for interest rates, stock indexes, economic indicators,
currency exchange rates and real estate values. Suppose that you want to see how
stock indexes are influenced by interest rates or the value of the dollar. Click one of
the stock index links on the right side of any page. Links to our multi-series graphs
and correlation analysis may be found at the bottom-center of the stock index pages.


Formula for periods with a rising Housing Starts Growth Rate:
1) Change in the Dow Jones Industrial Average Historical Return Rate DURING
periods with a rising Housing Starts Growth Rate:
The abbreviated formula is: (Dow Jones Industrial Average Historical Return Rate
Change / Housing Starts Growth Rate Rise) x 1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones Industrial Average
Historical Return Rate over all rolling 12 month periods with a rising Housing Starts
Growth Rate) / (Average Rise in the Housing Starts Growth Rate over the same 12
month periods)] x 1% = Published Rate.

2) Change in the Dow Jones Industrial Average Historical Return Rate AFTER a rising
Housing Starts Growth Rate:
The abbreviated formula is: (Subsequent Dow Jones Industrial Average Historical
Return Rate Change / Housing Starts Growth Rate Rise) x 1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones Industrial Average
Historical Return Rate during the 12 months following any rolling 12 month base
period with a rising Housing Starts Growth Rate) / (Average Rise in the Housing Starts
Growth Rate over the 12 month base periods)] x 1% = Published Rate.


Formula for periods with a declining Housing Starts Growth Rate:
1) Change in the Dow Jones Industrial Average Historical Return Rate DURING
periods with a declining Housing Starts Growth Rate:
The abbreviated formula is: (Dow Jones Industrial Average Historical Return Rate
Change / Housing Starts Growth Rate Decline) x -1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones Industrial Average
Historical Return Rate over all rolling 12 month periods with a declining Housing Starts
Growth Rate) / (Average decline in the Housing Starts Growth Rate over the same 12
month periods)] x -1% = Published Rate.

2) Change in the Dow Jones Industrial Average Historical Return Rate AFTER a
decreasing Housing Starts Growth Rate:
The abbreviated formula is: (Subsequent Dow Jones Industrial Average Historical
Return Rate Change / Housing Starts Growth Rate Decrease) x -1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones Industrial Average
Historical Return Rate during the 12 months following any rolling 12 month base
period with a declining Housing Starts Growth Rate) / (Average decline in the Housing
Starts Growth Rate over the 12 month base periods)] x -1% = Published Rate.


Rolling 12 Month Periods Defined:
Overlapping 12 month periods in a monthly data base.

For example:
In the 24 month period included in 2000 - 2001, there are 13 complete rolling 12
month periods. The first is January, 2000 - December, 2000. The second is February,
2000 - January, 2001. The third is March, 2000 - February, 2001 and so on. The last
complete rolling 12 month period in the 2000 - 2001 period is January, 2001 -
December, 2001.
80%
60%
40%
20%
0%
-20%
-40%
-60%
14000
10000
8000
6000
4000
2000
0
12000
The Dow Jones Industrial Average, is shown above in gray and is measured using the left axis.
US Housing Starts are shown in black and are measured in millions of housing units (right axis).
Dow Jones Industrial Average
Housing Starts
3.5
2.5
2.0
1.5
1.0
0.5
0
3.0
1/2000        1/2002               1/2004              1/2006               1/2008               1/2010          1/2012
Multi-Index Chart
TwinCharts.com
More Multi-Index Charts
To see the Dow Jones Industrial Average on a chart with many other indexes like the
Gross National Product, Oil Prices or Unemployment Rates, click
Dow Jones Indicators.
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